Unemployment rate is one of the most pivotal indicators that act as a hindrance to achieving development. Rising unemployment rate, which has been a matter of concern, for most of the countries in the world, is expected to increase all the more post COVID 19, from 5.3 percent in 2019 to 5.7 percent in 2022. It has been estimated that there would be 205 million unemployed people around the world, which will be higher than the pre-COVID numbers of 187 million in 2019. The projected slow growth implies lesser employment generation and this will lead to higher unemployment levels.  In such a situation, understanding what influences unemployment and an innovative approach to policy making is necessary. This paper focuses on the relationship between unemployment and growth rate. Okun’s law which states that there exists a negative relationship between unemployment and growth is also discussed. Other factors like inflation, exports, Foreign Direct Investment, population growth, Labour Force Participation Rate, Gross Fixed Capital Formation, interest rate are identified as variables that have a significant impact on unemployment rate. It highlights the importance of policy formulation with respect to unemployment.               

Keywords: Unemployment, Okun’s Law, Inflation, Labour Force, Policy Making.